The Consumer Awareness Crisis
Awareness of CUs is alarmingly low. One-half of consumers ages 18 to 24 don’t know what a CU is.
“What’s a credit union?” The most common response to this question is “I have no idea.” It’s the response that students enrolled in CUNA Management School often get when they conduct their “people on the street” interviews.
Other responses include, “a place where you pay your taxes,” “a company that helps protect your credit score,” and “something like a labor union—where you pay dues.”
The same disturbing trend is seen in research that’s a little more “statistically valid,” such as CUNA’s 2009-2010 Survey of Potential Members Report. The percentage of consumers “not at all familiar” with credit unions spiked in 2009 to a disconcerting 39%, up from about 25% over the past decade.
Why don’t people know what credit unions are? Why don’t they understand the benefits of credit union membership? Why has annual membership growth been only about 1.5% during banks’ worst public-relations crisis in a generation?
There are many answers, according to CUNA research and other sources:
- The credit union movement has not had a national advertising campaign during the past decade. That helps explain the highest levels of unfamiliarity (50%) among the youngest consumers (ages 18 to 24).
- Differences of opinion exist within the credit union movement over the necessity and affordability of a national advertising program.
- Credit union earnings have been low—an average 0.49% during the past five years. Most credit unions haven’t been able to afford local advertising, much less a national advertising program.
- Many credit unions have switched to community charters. This requires them to compete head-to-head with large banks’ hefty marketing budgets. The credit union message is often drowned out by larger competitors that can afford more messages delivered over more marketing channels.
- Explaining the credit union difference isn’t easy, especially if many consumers don’t really care in the first place. Consumers have short attention spans and they quickly lose interest in an explanation of the cooperative business model.
In any given market, there are a lot of consumers who have no idea they can join a credit union, says Mignhon Tourné, president/CEO of $300 million asset ASI Federal Credit Union, Harahan, La., near New Orleans. And they’re not aware of the broad range of affordable products and services available at most credit unions.
Because no two credit unions are alike, Tourné says it’s not surprising consumers are confused. “Unlike banks, credit unions have no consistent brand recognition,” she explains. “They aren’t easily identifiable to the general public. While banks typically offer similar services and keep consistent hours, credit unions cover a much broader spectrum. Some offer only consumer loans but not mortgage or business loans. Some small credit unions are open only a few days a week.” This is difficult for the public to wrap their heads around, she says.
Building consumer awareness has been an uphill battle since the first U.S. credit union opened its doors, she says, because of field-of-membership restrictions and product variety. Someone who joins a small faith-based credit union will have a vastly different experience than someone who joins Navy Federal Credit Union, she says.
Consumer confusion—even apathy—actually presents an opportunity to seize the moment and improve consumer awareness, she adds. “With the financial meltdown, and the backlash against Wall Street and irresponsible multinational banks, it’s high time we capitalize on this sentiment and show credit unions for what they are—responsible, ethical lenders with a mission of serving the underserved.”
Tourné suggests thinking about your credit union’s unique characteristics. What’s your credit union doing better than its competitors? Is there a niche or a void in your community that your credit union can fill to help its members? Answering these questions and taking the appropriate actions will help your credit union shine and put it in a league of its own.
“We know we’re outspent by at least 10 to one by most of our competitors,” says Tourné. “Rather than trying to mirror them, we look at what they’re doing and then try to do it differently.”
ASI Federal, for example, has fostered its identity as an ethical product developer in the arena of non-credit-based, low-cost alternatives to payday lending. “We’ve positioned our credit union as an ethical leader,” says Tourné. “We let social investors know that by supporting ASI Federal, they’re allowing
us to expand economic development in some of
New Orleans’ poorest communities.”
The credit union also differentiates itself by giving “legs to its mission.” It formed a 501(c)(3) affiliate that allows it to offer free foreclosure prevention counseling to any client, regardless of membership status. “The nonprofit also offers credit counseling and homebuyer education,” says Tourné, “and we work with local schools in low-income communities to promote college savings.”
If you want to be recognized for what you do, you have to earn that awareness by being more than the name of a financial institution, she says. If your credit union doesn’t have a huge marketing budget, Tourné suggests three ways to increase awareness:
1. Offer innovative products and services;
2. Reach out to underserved markets; and
3. Engage in advocacy around economic empowerment, fair lending, and issues affecting the unbanked or underserved.
Next: YouTube videos
Being told the credit union difference is one thing; seeing the difference can make a much bigger impact, says Carla Hedrick, president/CEO of $220 million asset Denver Community Federal Credit Union. “You have to show members how they can participate in the process and have an impact. If they understand our difference, they’ll tell others.”
Confusion about what credit unions are, who can join, and why they exist at all is nothing new. But today, says Hedrick, credit unions have a rare opportunity to seize the moment and educate consumers who are disenchanted with their banking relationships, and to improve relationships with current members.
“Credit unions have unique opportunities to shine in a financial arena that looks pretty dingy today. We can’t put our heads in the sand. We should explain succinctly who we are and what we do,” she says. “We have an opportunity and a responsibility to inform consumers of the amazing choice they have—shame on us if we don’t take advantage of it.”
Denver Community Federal is heightening consumer awareness with actions people can relate to, she says. Last year, it donated a foreclosed property to the Center for Education and Economic Equity—a youth-directed nonprofit that focuses on providing job skills.
“We participated in 203 community events, we offered 168 education classes to both members and nonmembers, and we provided leadership and participation in the Bank on Denver program, initiated by the mayor,” says Hedrick. “This is a tangible benefit that helps people understand what it means to be a different type of financial institution.”
Denver Community Federal also uses social media, including three “We Admit It” videos, which explain to viewers that credit union members are owners. Since posting the videos on YouTube in August, each one has received nearly 4,000 views.
“The most important thing about these videos is that we weren’t using social media as the final viewing point for the member,” explains Hedrick, “but as a way to collect data about the videos.” Data included demographic information, viewer preferences, and needed changes. “Some people get stuck thinking social media is a way to ‘tell,’ but we’re using it to ‘ask’ and to support other traditional media.”
The credit union’s Twitter account provided another opportunity to shine. “A woman was upset with Wells Fargo and went on Twitter to complain. In doing so, she stumbled upon us tweeting about the benefits of our products and services,” says Hedrick. The credit union’s outreach efforts persuaded the woman to become a member. She opened several new accounts, including an auto loan.
In another social media situation, Denver Community Federal reached out to a member who
was already saying positive things about the credit union online.
“She was using a powerful consumer-review social media site called yelp.com,” says Hedrick. “We found a couple of the other businesses she was saying nice things about and put together a care package for her with products from those other businesses. Since then, she has posted about us on at least two other threads, which were both people from out of town asking if anyone had found a bank they liked.” Denver Community Federal also reaches out through an online radio show and financial education classes open to everyone.
As you build awareness, remember to include employees in the outreach efforts, she urges. “Build awareness from within by creating ‘believers’ among employees, friends, and family members so they’ll tell others,” she says. “Share good news with the community. Credit unions tend to be internally focused. Why not share our awards and our great story with those outside our membership?”
Consider sharing resources and media campaign costs with other local credit unions, she suggests. “We can’t afford to do it alone. We’re all stakeholders in this and responsible for increasing awareness.”
Next: Demonstrate the difference
Demonstrate the difference
Patricia Kimmel, president/CEO of $269 million asset Belvoir Federal Credit Union, Woodbridge, Va.,
takes a daily walk through the credit union to make sure employees are demonstrating the credit union difference.
“We’re all busy,” she says, “and it’s easy to get caught up in daily operations and not prioritize the need to differentiate ourselves from the competition. In fact, many credit union employees on the front line don’t know the credit union difference. As credit union leaders, we have to stay involved with employees and members to make sure our message is being delivered properly and is being heard.”
Belvoir Federal is working on a new training module that will educate its team on credit union history, legislative changes, and the overall basic cooperative nature of credit unions. “Through this type of education and reinforcement, all our employees will
be prepared to explain the credit union difference,” she says.
But she agrees with Hedrick that you can’t just tell people about the difference, you have to demonstrate it. Belvoir Federal, for example, has a high interest-rate checking account that pays better than any other area checking account in the credit union’s market. It has a higher rate, in fact, than competitors’ basic passbook savings accounts.
The credit union also offers a special checking account for active-duty military members. It pays dividends, rebates surcharges, and includes bill-payment services.
Belvoir Federal also uses social media to boost consumer awareness. “During the holiday season we used our YouTube channel for members to come in and film short holiday greetings for loved ones they couldn’t be with. We offered this for free, and recorded about 75 holiday greetings.”
The erosion of consumer awareness is a challenge not a crisis, says Kimmel. Belvoir Federal’s field of membership is primarily military personnel who have a good grasp of how credit unions are different. But outside the military, she says, most Americans lump credit unions with banks.
How can your credit union increase consumer awareness? It boils down to two major points: innovation and great storytelling, says Kimmel.
Credit unions have to constantly work to differentiate themselves with innovative products that differ in significant ways from the standard banking community.
“Clearing up consumer confusion is also all about education, word-of-mouth, and telling our story,” she adds. “Our website provides ‘good news’ stories about member experiences, but it’s even better for our members to tout the credit union difference.”
Cooperative advertising campaigns are a great way to improve consumer awareness, she says. “Competition between credit unions has impaired some cooperation that should exist. There’s just not enough being done collectively to get our message out there.
“If each credit union does its job of educating members, nonmembers, and their communities,” she adds, “we can make inroads and overcome the confusion. It’s going to take time and a group effort, but I believe it can be done.”
New Website to Boost CU Visibility
While not everyone understands why credit unions are a wise choice, the tide is turning, says Mark Wolff, CUNA’s senior vice president of communications. “After the financial meltdown, many people have had it with big banks, and they’re looking for local, consumer-friendly alternatives like credit unions,” he says.
Help is on the way. CUNA and the leagues are poised to launch a new consumer awareness website that will help more consumers learn about credit unions and find one to join.
The website has the Web address asmarterchoice.org, which will be presented in the context of media stories, Web postings, and social media venues explaining that choosing a credit union is a smarter choice for great service and good deals on financial services, says Wolff.
“We’re expanding the reach of the findacreditunion.com locator to all 50 states,” he says. “It will be the most comprehensive locator out there—including all credit unions of all sizes, charters, and locations. Our research told us we need a locator tool that recommends credit unions not just by proximity, but by eligibility of the inquirer. The site will also promote and reinforce the benefits of credit union membership, through testimonials and positive media coverage.”
The site’s purpose is to reinforce and complement state-level advertising. “We also envision a social media element—such as tweeting, blogs, and social media forums,” says Wolff. “One of our key audiences is young adults, so we’ll use social media to keep the site’s content updated and fresh.”Historically, credit unions haven’t used advertising aggressively. But times are changing, says Mark Wolff, CUNA’s senior vice president of communications. “People see far more bank advertising than credit union advertising,” he says, “and that has had an effect on consumer awareness.”
Today, more credit unions are using savvy advertising strategies, and they’re attracting attention, he adds. “Credit unions’ more aggressive marketing approach captured the attention of The New York Times in a front-page business section story this past year.
“I’ve seen more local credit union TV commercials in the past three years than in the past 27 years combined,” adds Wolff, who has lived in the Washington, D.C., area for 30 years. “Today, with more SEGs [select employee groups] and community charters, it makes more economic sense for credit unions to aggressively advertise. In the old days, such a strategy would reach too many people who would be ineligible to join.”
Viral campaigns also have helped increase credit union awareness, says Wolff. The Huffington Post’s “Move Your Money” campaign urges consumers to move their money from big banks to local credit unions and community banks.